GREELEY, Colo., May 10, 2018 (GLOBE NEWSWIRE) -- Pilgrim’s Pride Corporation (NASDAQ:PPC) reports first quarter 2018 financial results.

First Quarter Highlights

  • Consolidated numbers reflect Moy Park for the entire quarter, including historical data in accordance to U.S. GAAP.
  • Net Sales of $2.75 billion, +10.8% vs same quarter last year (+35.9% if excluding the Moy Park numbers from last year).
  • Net Income of $119.4 million, or an increase of 27.1% vs a year ago.
  • Operating Income margins of 6.9% in U.S., 14.6% in Mexico and 3.9% in Europe operations, respectively.
  • Adjusted EBITDA of $271.8 million (or a 9.9% margin), or 18.9% higher than last year and Adjusted EPS of $0.53, or a 39.5% increase.
  • Recent acquisitions and investments both in U.S. and international are already generating value and improving portfolio by adding more differentiated products while Key Customer approach has continued to produce growth and margin expansion beyond the underlying market conditions.
  • Mexican operations exceeded expectations driven by normalization of the market’s logistics and infrastructure disruptions caused by natural events. Diversification into premium Pilgrim’s brand is gaining momentum and producing great results.
  • Successful refinancing of the Moy Park Bonds, impacting the interest in the quarter but with strong support from market and favorable terms for future benefits.
Unaudited (2), In Millions, Except Per Share and Percentages
 Thirteen Weeks Ended
 Apr 1, 2018 Mar 26, 2017 Change
Net Sales$2,746.7 $2,479.3 +10.8%
GAAP EPS$0.48 $0.38 +26.3%
Operating Income$201.6 $166.7 +20.9%
Adjusted EBITDA (1)$271.8 $228.5 +18.9%
Adjusted EBITDA Margin (1)9.9% 9.2% +0.7pts
      

(1) Reconciliations for non-GAAP measures are provided in subsequent sections within this release.
(2) Figures have been adjusted to include full-quarter of Moy Park, in accordance to U.S. GAAP.

“For Q1 our U.S. operations continued to deliver solid performance, especially within the small-bird and case-ready businesses. Our big bird deboning experienced a soft start as prices remained unseasonally low through the first half of the quarter but prices recovered quickly and returned closer to normal seasonality. Despite some headwinds in feed, labor and logistics, the investments we made over the past few years, together with the recent acquisitions and our capture of operational improvements, helped us to generate consistent results and continued to contribute to the evolution of our portfolio in supporting our vision to become the best and most respected company in our industry,” stated Bill Lovette, Chief Executive Officer of Pilgrim's.

“We had a very strong performance at our Mexican operations in Q1 as the prior logistics and infrastructure dislocations caused by natural events normalized and demand returned at strong levels. Our volumes increased during the quarter, driving a very strong EBITDA performance that was not only well above the level from a year ago but also above initial expectations. The strength has continued, which we see as the continuation of the trend of a strong, growing market for chicken. Our Prepared Foods are growing at a double digit rate and are generating great results under both premium Pilgrim’s and Del Dia to drive the evolution of our Mexican portfolio towards more differentiated, higher-value products, and ultimately margin expansion.”

“In Europe, we are already seeing positive results from the integration, with significant share gained at a key customer and several other projects to further optimize our relationships, highlighting how our newly acquired operations are already benefiting from our team’s enhanced focus on Key Customer strategy. The operational improvements initiatives are also going well and we are slightly ahead of our $50 million synergy target for the next two years. Based on the success of the previous integrations, we continue to believe we have the method and the team to continue to grow the profitability and potential of our European business.”

Conference Call Information

A conference call to discuss Pilgrim’s quarterly results will be held tomorrow, May 11, at 7:00 a.m. MT (9 a.m. ET).  Participants are encouraged to pre-register for the conference call using the link below.  Callers who pre-register will be given a unique PIN to gain immediate access to the call and bypass the live operator.  Participants may pre-register at any time, including up to and after the call start time.

To pre-register, go to: https://services.choruscall.com/links/ppc180511.html

You may also reach the pre-registration link by logging in through the investor section of our website at www.pilgrims.com and clicking on the link under “Upcoming Events.”

For those who would like to join the call but have not pre-registered, access is available by dialing +1 (844) 883-3889 within the US, or +1 (412) 317-9245 internationally, and requesting the “Pilgrim’s Pride Conference.” Please note that to submit a question to management during the call, you must be logged in via telephone.

Replays of the conference call will be available on Pilgrim’s website approximately two hours after the call concludes and can be accessed through the “Investor” section of www.pilgrims.com. The webcast will be available for replay through August 11, 2018.

About Pilgrim’s Pride

Pilgrim’s employs approximately 51,400 people and operates chicken processing plants and prepared-foods facilities in 14 states, Puerto Rico, Mexico, the U.K, and continental Europe. The Company’s primary distribution is through retailers and foodservice distributors.  For more information, please visit www.pilgrims.com.

Forward-Looking Statements

Statements contained in this press release that state the intentions, plans, hopes, beliefs, anticipations, expectations or predictions of the future of Pilgrim’s Pride Corporation and its management are considered forward-looking statements. It is important to note that actual results could differ materially from those projected in such forward-looking statements. Factors that could cause actual results to differ materially from those projected in such forward-looking statements include: matters affecting the poultry industry generally; the ability to execute the Company’s business plan to achieve desired cost savings and profitability; future pricing for feed ingredients and the Company’s products; outbreaks of avian influenza or other diseases, either in Pilgrim’s Pride’s flocks or elsewhere, affecting its ability to conduct its operations and/or demand for its poultry products; contamination of Pilgrim’s Pride’s products, which has previously and can in the future lead to product liability claims and product recalls; exposure to risks related to product liability, product recalls, property damage and injuries to persons, for which insurance coverage is expensive, limited and potentially inadequate; management of cash resources; restrictions imposed by, and as a result of, Pilgrim’s Pride’s leverage; changes in laws or regulations affecting Pilgrim’s Pride’s operations or the application thereof; new immigration legislation or increased enforcement efforts in connection with existing immigration legislation that cause the costs of doing business to increase, cause Pilgrim’s Pride to change the way in which it does business, or otherwise disrupt its operations; competitive factors and pricing pressures or the loss of one or more of Pilgrim’s Pride’s largest customers; currency exchange rate fluctuations, trade barriers, exchange controls, expropriation and other risks associated with foreign operations; disruptions in international markets and distribution channel, including anti-dumping proceedings and countervailing duty proceedings; and the impact of uncertainties of litigation as well as other risks described under “Risk Factors” in the Company’s Annual Report on Form 10-K and subsequent filings with the Securities and Exchange Commission. Pilgrim’s Pride Corporation undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact:  Dunham Winoto
   Director, Investor Relations
   IRPPC@pilgrims.com
   (970) 506-8192
   www.pilgrims.com


PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
 
  April 1, 2018 December 31, 2017
  (Unaudited)  
  (In thousands)
Cash and cash equivalents $580,811  $581,510 
Restricted cash 10,657  8,021 
Trade accounts and other receivables, less allowance for doubtful accounts 629,829  565,478 
Accounts receivable from related parties 1,471  2,951 
Inventories 1,242,352  1,255,070 
Income taxes receivable 160  — 
Prepaid expenses and other current assets 124,358  102,550 
Assets held for sale 2,923  708 
Total current assets 2,592,561  2,516,288 
Deferred tax assets 3,275  — 
Other long-lived assets 18,629  18,165 
Identified intangible assets, net 628,414  617,163 
Goodwill 1,033,126  1,001,889 
Property, plant and equipment, net 2,121,630  2,095,147 
Total assets $6,397,635  $6,248,652 
     
Accounts payable $782,757  $733,027 
Accounts payable to related parties 5,475  2,889 
Revenue contract liability 29,304  36,607 
Accrued expenses and other current liabilities 351,558  410,152 
Income taxes payable 122,613  222,073 
Current maturities of long-term debt 149,389  47,775 
Total current liabilities 1,441,096  1,452,523 
Long-term debt, less current maturities 2,625,698  2,635,617 
Deferred tax liabilities 212,316  208,492 
Other long-term liabilities 84,758  96,359 
Total liabilities 4,363,868  4,392,991 
Common stock 2,604  2,602 
Treasury stock (231,758) (231,758)
Additional paid-in capital 1,933,780  1,932,509 
Retained earnings 293,361  173,943 
Accumulated other comprehensive income (loss) 26,469  (31,140)
Total Pilgrim’s Pride Corporation stockholders’ equity 2,024,456  1,846,156 
Noncontrolling interest 9,311  9,505 
Total stockholders’ equity 2,033,767  1,855,661 
Total liabilities and stockholders’ equity $6,397,635  $6,248,652 


PILGRIM’S PRIDE CORPORATION
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF INCOME
(Unaudited)
     
  Thirteen Weeks Ended
  April 1, 2018 March 26, 2017
  (In thousands, except per share data)
Net sales $2,746,678  $2,479,340 
Cost of sales 2,459,013  2,222,805 
Gross profit 287,665  256,535 
Selling, general and administrative expense 85,283  89,811 
Administrative restructuring charges 789  — 
Operating income 201,593  166,724 
Interest expense, net of capitalized interest 50,300  19,112 
Interest income (1,590) (368)
Foreign currency transaction losses (gains) (1,721) 691 
Miscellaneous, net (1,617) (2,843)
Income before income taxes 156,221  150,132 
Income tax expense 36,997  49,394 
Net income 119,224  100,738 
Less: Net income from Granite Holdings Sàrl prior to
  acquisition by Pilgrim's Pride Corporation		 —  6,275 
Less: Net income (loss) attributable to noncontrolling interests (194) 542 
Net income attributable to Pilgrim’s Pride Corporation $119,418  $93,921 
     
Weighted average shares of common stock outstanding:    
Basic 248,838  248,692 
Effect of dilutive common stock equivalents 151  234 
Diluted 248,989  248,926 
     
Net income attributable to Pilgrim's Pride Corporation per share of
  common stock outstanding:		    
Basic $0.48  $0.38 
Diluted $0.48  $0.38 


PILGRIM’S PRIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
(Unaudited)
 
  Thirteen Weeks Ended
  April 1, 2018 March 26, 2017
  (In thousands)
Cash flows from operating activities:    
Net income $119,224  $100,738 
Adjustments to reconcile net income to cash provided by operating activities:    
Depreciation and amortization 69,201  62,672 
Noncash loss on early extinguishment of debt 3,918  — 
Foreign currency transaction loss related to borrowing arrangements 5,745  2,158 
Amortization of premium related to Senior Notes (167) — 
Accretion of discount related to Senior Notes 76  — 
Impairment expense 470  — 
Loss on property disposals 80  118 
Gain on equity method investment (16) (13)
Share-based compensation 1,273  1,460 
Deferred income tax expense (benefit) (4,735) 12,780 
Changes in operating assets and liabilities:    
Trade accounts and other receivables (61,945) (50,492)
Inventories 19,541  (62,530)
Prepaid expenses and other current assets (20,777) (17,754)
Accounts payable, accrued expenses and other current liabilities (29,171) (5,412)
Income taxes (98,784) 25,216 
Long-term pension and other postretirement obligations (2,759) (1,633)
Other operating assets and liabilities (534) (1,013)
Cash provided by operating activities 640  66,295 
Cash flows from investing activities:    
Acquisitions of property, plant and equipment (76,681) (121,639)
Business acquisition —  (359,698)
Proceeds from property disposals 1,021  181 
Cash used in investing activities (75,660) (481,156)
Cash flows from financing activities:    
Proceeds from revolving line of credit and long-term borrowings 502,341  662,795 
Payments on revolving line of credit, long-term borrowings and capital lease obligations (433,550) (334,453)
Proceeds from equity contribution under Tax Sharing Agreement between JBS USA Food Company Holdings and Pilgrim's Pride Corporation 5,558  5,038 
Payment of capitalized loan costs (4,061) — 
Purchase of common stock under share repurchase program —  (14,641)
Cash provided by (used in) financing activities 70,288  318,739 
Effect of exchange rate changes on cash and cash equivalents 6,669  2,182 
Increase (decrease) in cash, cash equivalents and restricted cash 1,937  (93,940)
Cash, cash equivalents and restricted cash, beginning of period 589,531  297,524 
Cash, cash equivalents and restricted cash, end of period $591,468  $203,584 


PILGRIM’S PRIDE CORPORATION

Selected Financial Information

(Unaudited)

“EBITDA” is defined as the sum of net income (loss) plus interest, taxes, depreciation and amortization.  “Adjusted EBITDA” is calculated by adding to EBITDA certain items of expense and deducting from EBITDA certain items of income that we believe are not indicative of our ongoing operating performance consisting of: (i) income (loss) attributable to non-controlling interests, (ii) restructuring charges, (iii) reorganization items, (iv) losses on early extinguishment of debt and (v) foreign currency transaction losses (gains). EBITDA is presented because it is used by management and we believe it is frequently used by securities analysts, investors and other interested parties, in addition to and not in lieu of results prepared in conformity with accounting principles generally accepted in the US (“GAAP”), to compare the performance of companies.  We believe investors would be interested in our Adjusted EBITDA because this is how our management analyzes EBITDA.  The Company also believes that Adjusted EBITDA, in combination with the Company’s financial results calculated in accordance with GAAP, provides investors with additional perspective regarding the impact of certain significant items on EBITDA and facilitates a more direct comparison of its performance with its competitors.  EBITDA and Adjusted EBITDA are not measurements of financial performance under GAAP.  They should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net income as indicators of our operating performance or any other measures of performance derived in accordance with GAAP.

PILGRIM'S PRIDE CORPORATION
Reconciliation of Adjusted EBITDA
    
(Unaudited)Thirteen Weeks Ended
 April 1, 2018 March 26, 2017
 (In thousands)
Net income$119,224  $100,738 
Add:   
Interest expense, net48,710  18,744 
Income tax expense (benefit)36,997  49,394 
Depreciation and amortization69,201  62,672 
Minus:   
Amortization of capitalized financing costs1,757  3,210 
EBITDA272,375  228,338 
Add:   
Foreign currency transaction losses (gains)(1,721) 691 
Acquisition charges179  — 
Restructuring charges789  — 
Minus:   
  Net income (loss) attributable to noncontrolling interest(194) 542 
Adjusted EBITDA$271,816  $228,487 

EBITDA margins have been calculated by taking the relevant unaudited EBITDA figures, then dividing by Net Revenue for the applicable period.

PILGRIM'S PRIDE CORPORATION
Reconciliation of EBITDA Margin
         
(Unaudited) Thirteen Weeks Ended Thirteen Weeks Ended
  April 1, 2018 March 26, 2017 April 1, 2018 March 26, 2017
  (In thousands)
Net income from continuing operations $119,224  $100,738  4.34% 4.06%
Add:        
Interest expense, net 48,710  18,744  1.77% 0.76%
Income tax expense 36,997  49,394  1.35% 1.99%
Depreciation and amortization 69,201  62,672  2.52% 2.53%
Minus:        
Amortization of capitalized financing costs 1,757  3,210  0.06% 0.13%
EBITDA 272,375  228,338  9.92% 9.22%
Add:        
Foreign currency transaction losses (gains) (1,721) 691  (0.06)% 0.03%
Acquisition charges 179  —  0.01% —%
Restructuring charges 789  —  0.03% —%
Minus:        
  Net income (loss) attributable to noncontrolling interest (194) 542  (0.01)% 0.02%
Adjusted EBITDA $271,816  $228,487  9.90% 9.23%
         
Net Revenue: $2,746,678  $2,479,340  $2,746,678  $2,479,340 

A reconciliation of net income (loss) attributable to Pilgrim's Pride Corporation per common diluted share to adjusted net income (loss) attributable to Pilgrim's Pride Corporation per common diluted share is as follows:

PILGRIM'S PRIDE CORPORATION
Reconciliation of Adjusted Earnings
(Unaudited)
     
  Thirteen Weeks Ended
  April 1,
 2018		 March 26,
 2017
  (In thousands, except per share data)
Net income (loss) attributable to Pilgrim's Pride Corporation $119,418  $93,921 
Loss on early extinguishment of debt 12,895  — 
Acquisition and restructuring charges, net of taxes 968  — 
Foreign currency transaction losses (gains) (1,721) 691 
Income (loss) before loss on early extinguishment of debt and foreign
  currency transaction losses (gains)		 131,560  94,612 
Weighted average diluted shares of common stock outstanding 248,989  248,926 
Income (loss) before loss on early extinguishment of debt and foreign
  currency transaction losses (gains) per common diluted share		 $0.53  $0.38 

A reconciliation of GAAP earnings per share (EPS) to adjusted earnings per share (EPS) is as follows:

PILGRIM'S PRIDE CORPORATION
Reconciliation of GAAP EPS to Adjusted EPS
(Unaudited)
    
 Thirteen Weeks Ended
 April 1, 2018 March 26, 2017
 (In thousands, except per share data)
GAAP EPS$0.48  $0.38 
Loss on early extinguishment of debt0.05  — 
Acquisition and restructuring charges, net of taxes0.01  — 
Foreign currency transaction losses (gains)(0.01) — 
Adjusted EPS$0.53  $0.38 
    
Weighted average diluted shares of common stock outstanding248,989  248,926 


PILGRIM'S PRIDE CORPORATION
Supplementary Selected Segment and Geographic Data
     
  Thirteen Weeks Ended
  April 1, 2018 March 26, 2017
  (Unaudited)
  (In thousands)
Sources of net sales by country of origin:    
US: $1,841,105  $1,736,405 
Europe: 544,300  458,848 
Mexico: 361,273  284,087 
Total net sales: $2,746,678  $2,479,340 
     
Sources of cost of sales by country of origin:    
US: $1,658,734  $1,548,099 
Europe: 501,568  417,518 
Mexico: 298,735  257,212 
Elimination: (24) (24)
Total cost of sales: $2,459,013  $2,222,805 
     
Sources of gross profit by country of origin:    
US: $182,370  $188,306 
Europe: 42,733  41,330 
Mexico: 62,538  26,875 
Elimination: 24  24 
Total gross profit: $287,665  $256,535 
     
Sources of operating income by country of origin:    
US: $127,286  $133,556 
Europe 21,413  14,372 
Mexico: 52,870  18,772 
Elimination: 24  24 
Total operating income: $201,593  $166,724 

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